Despite the 2020 projection being on the low end of my estimate (i.e. AT LEAST 10 years), this HousingWire.com article actually confirms what I have been saying since according to the HousingWire.com article, "the projection seems conservative in light of historic data." The article states that the Moody's analyst wrote that after the Great Depression, housing prices took nearly 20 years to return to their previous peak. the report also shows that in Japan 15 years passed since their residential market lost half of its value and there are still no signs of a recovery.
The HousingWire.com further quotes the Moody's report as saying "housing prices will regain normalized rates of appreciation during the first five years of the recovery. But the decline in prices and the subsequent recovery vary by region to region. In some states, prices will decline 6% or less and recovery will come before 2014. Other areas that have experienced declines of more than 46% won’t get back to 2006 prices until 2023."
My prediction for Middle Tennessee is that the Middle TN housing market will not recover peak home values until 2023-2025. This is due to the following characteristics of the Middle Tennessee housing market:
- The Middle TN housing market peaked much later than most areas of the country with a peak of late 2007/early 2008 instead of early to late 2006.
- Extreme overbuilding during that peak especially in the higher price ranges. This supply balance will continue for many years since for some reason people are still building here.
- Tennessee has historically high rates of personal bankruptcy which will cause higher than average foreclosure and short sale rates.
- Tennessee has higher than average unemployment rates, which will also cause higher than average foreclosure and short sale rates.